AHtUNe ALLIANCES
The rush by major airlines into
global alliances has been
repeated at a regional level
GUNTER ENDRES/LONDON
GLOBAL ALLIANCES with fancy names like oneworld, Wings and Star have become fashionable in the airline indus try. But a quiet revolution has also taken
place at a regional level in Europe, where flag
carriers have spun a vast second-tier web of
alliances, drawing in smaller airlines to extend
and secure market influence and, in some
instances, swallow up potential competitors.
British Airways led the way with the first
franchises - CityFlyer Express and Loganair -
signed In July 1993 and July 1994, respectively,
since widened to include another seven in
Europe and one in South Africa. Other
European majors were slow to enter the race,
but today there is a still-growing net of
alliances, partnerships and codeshare agree
ments with regional airlines spread across the
continent and transcending national boundaries.
There were two main attractions for the
majors in linking with smaller carriers which
both still hold good. It enabled them to access
valuable feed from provincial cities into their
intercontinental or regional hubs and provided
the opportunity to transfer thinner, marginal
routes to lower-cost operators with more suit
able, smaller capacity aircraft. A third axis -
route development - has also come into effect.
It makes more economic sense for majors to use
regional affiliates to establish and develop new
routes, especially where the likely benefits can
not easily be evaluated.
REGIONAL BENEFITS
For the regional carriers, the benefits are obvi
ous. With the backing of a well-established
global brand, recognition in the market is
enhanced, while opportunities for growth are
multiplied. Performance figures for the leading-
regional airlines bear this out, illustrating the
past five years' progress. The converse is also
true in that without aligning with a flag carrier
or other major airline, many regionals would
have had little chance to make the transition
from small niche operators to fully fledged sec
ond-tier airlines.
Carsten Spohr, Lufthansa's manager for
regional partnerships, says the reason can be
found in a fundamental realignment of the air
line industry. "The market is changing from
competition between airlines to competition
between alliances," he says. "It is this which has
promoted a strong tendency among regionals
to orientate themselves with the major alliance
groupings." But it is not just the majors, looking
for market access and hub feed, that are doing
the courting. More often than not, says Spohr, it
is the regionals which make the first approach.
40 FLIGHT INTERNATIONAL 18 - 24 January 2000